Wednesday, 15 July 2015

June 2015 Goals Progress Report: First Half

Believe it or not we are already in July.

That means we have already seen half the year pass and it is time for a fresh review of my progress so far towards my investing goals for the year.

My last update at the first quarter mark of the year showed me making good progress. Has this been repeated now we top over into the second part of the year?

Let's take a quick look.

1: Retain a portfolio yield of more than 1.25 times the FTSE All Share yield.

Well on 2 July the FTSE All Share yield was sitting at 3.41% after the Greek Crisis rout. As a result, my portfolio target is 4.26%. So what is my portfolio yield at present? 

4.03%. Obviously this means I am a little over 5% below my current target. 

However, I am pretty happy overall with this. Recently I have been focusing on high dividend growers rather than high dividend yielders. As such, this has pushed me below my target.

That being said, I am still above 4% which--for me--is an excellent yield which has a nice mix of yield and growth (my overall yield is anticipated to organically grow by about 5.3% next year...not bad).

A bit behind target.

2: Earn £800 or more from dividends

This would represent an average target of about £66.67 per month. So far this year I am running at an average monthly income of £92.86. This means that, with the first half of 2015 already tucked away in bed, I have already pulled in a tidy £557.17 in dividend income. 

I am, therefore, only £242.83 short of my target for the rest of year. As a result, I just need to average £40.47 per month from this point onwards in order to hit my target. 

Just running some quick numbers, I predict my dividend income will very, very easily surpass this goal. As a result, I think it is time to revise this up a little. In fact, not a little but by 37.5% to £1,100.

Now, you may think if I have already pulled in nearly £560 this year I should easily hit £1,100. After all, multiplying £560 by two would offer £1,120. However, I think this is a nicely challenging goal as the first half was much stronger than the second half is looking likely to be.  Consequently, I think this is a solid yet aspirational goal. We will see if it is too much.

Well ahead of target. Revised target: £1,100.

3: Reach a "Work Freedom Day" of 3 February 2015

As is apparent above, my first half dividend income has been much stronger than I anticipated. However, I have also been stronger than I thought in another area: expenses cutting. So far this year my average monthly expenses has been £745.50. That is a massive 12% lower than my average monthly expenses in 2014 of £843.

As such, my daily expenses are running at about £24.51 in 2015.

As a result of this I am doing very well with my "Work Freedom Day" target. Already I am up to 22 January 2015. I only have 12 more days to make up to hit my target of 3 February.

I think this goal therefore needs to be ratcheted up a bit. I will therefore add another week (that is to 10 February 2015) to my "Work Freedom Day" target.

Well ahead of target. Revised target: 10 February 2015. 

4: Retain a portfolio Beta volatility value of less than 0.85

Back in March my portfolio Beta was sitting at 0.79. I have since then added quite a few high Beta companies. As a result, I have seen my volatility grow a little to 0.81 since then. Still comfortably below the 0.85 target. Looking good so far.

On target.

5: Hold at least 25 equities but fewer than 30 (not including spin-offs/corporate actions)

Back in March I had 26 holdings in my portfolio. However, since then I have bought into new holdings in:
  1. FTSE 250 soft-drinks maker, Britvic (LSE:BVIC)
  2. FTSE 100 insurance and investment giant, Legal & General (LON:LGEN)
  3. Eastern and Central Europe-focused alcoholic drinks maker, Stock Spirits Group (LON:STCK)
  4. FTSE 100 advertising the media giant, WPP (LSE:WPP)
  5. FTSE 100 pharmaceutical giant, AstraZeneca (LON:AZN)
I have also had two new additions brought in through corporate actions:
  1. S&P 500 reinsurance giant, XL Group (NYSE:XL) after they purchased Catlin Group.
  2. Australian mining company, South32 (LON:S32) which was spun-off from BHP Billiton. 
As a result of all these changes I have 32 holdings in total. However, taking into account the corporate actions the figure sits at 30. As a result, I am bumping my head on the upper limit I set myself. 

In reality, I am unsure how useful this target is. I therefore think it is best to either retire or revise it. For now I will revise it dramatically to between 30 and 45 companies but this time including corporate actions.

On target. Target revised to between 30 and 45 companies (including corporate actions).

6: Reduce Trading Charges to below 1.3% of total invested in year.

So far this year I have invested £12,188.82 of new capital in equities. Of this, £150.66 has been eaten up by trading fees. As a result, my current trading charges percentage is 1.24% of the total invested. Back in March this was sitting at 1.3%. As a result I am pretty happy to say that I am improving rapidly in bringing this down.

For now I will keep this target as it is. However, there is the possibility of revising this down further to perhaps 1.25%.

Ahead of target. Target under review.

7: Increase Diversification

My final goal was to increases diversification. At the start of the year this involved two particular focuses:
  1. Inclusion of a property-related investment;
  2. Addition of a non-UK listed company or non-UK focused investment trust.
The first part I achieved in the first quarter of this year. So what about the second? Well, yes, I have really as noted above with the addition (admittedly through an acquisition) of XL Group to my portfolio. As such, I think I am happy to mark this as achieved as well.

In reality, I would over time like to build up a modest non-UK listed portfolio. However, I think I will wait until I decide to set-up a SIPP (self-invested personal pension) account as this has favourable dividend withholding tax rates for certain countries (such as the US, which is 0%).

I am also now pretty happy with the diversification of my portfolio not only geographically (according to sales) but also across sectors. As a result, I think I can now retire this specific goal rather than revise it.

Achieved. New target postponed.


Overall I am pretty happy with my progress so far this year.

Most of my goals for the year are either achieved, on track or at least not too far away from being so. Also, it is encouraging that I am able to revise so many of them to be tougher for the second half of the year. Hopefully I can still reach even these targets.

However, the second half of the year will see me with more limited funds to spare. As a result, things may become a little more challenging. We will see!

How are you doing with your targets so far this year? Are you ahead or behind schedule?

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[Creative Commons image reproduced from Flickr user Kevan]


  1. Great update, DD.

    Things looking good, in particular on the dividend front, with you revising your original goal - well done!

    I should be hitting my own dividend target at the end of this month.

    Interesting about your 'at least 25 equities but less than 30' goal.

    Over on FirevLondon's blog, he talks of having over 200 holdings!

    If I include all my various p2p accounts, then I have around 40 different holdings. I'm aiming to keep this below 100, so lots of shares for me to go for still!

    Keep up the great work!

    1. Thanks, weenie. I know, pretty chuffed with the progress so far this year. Even with a presumably weaker second half I should be well ahead of what I was expecting!

      Not bad at all with your target. Had any thoughts on how you will revise it?

      Yes, it was an odd goal to include. Even when I was thinking about it I was unsure. However, at the time I had a much smaller portfolio and wanted to at least get it above 25 for diversification purposes. However, equally I wanted to ensure that I didn't start just adding companies for the sake of a new name (hence the upper limit).

      I am now quite happy with the size of the portfolio in terms of the number of companies. I will now just let it grow/shrink according to what the world offers!

      Yes, I would certainly not look to have that many. 200 seems rather excessive. Over the years it may be that the number of holdings floats up quite a bit. But I would be surprised if it went beyond 70. But who knows.

      The law of diminishing returns I think applies to diversification. After a certain point you get little reduced volatility benefit and a hefty chunk of investment "house-working" headache!

      It is interesting you count your P2P as separate holdings. I think you're right. In which case there is an additional two added to my tally!

      Thanks for the comment and look forward to seeing your post on crossing the dividend target!

    2. I'm not planning on revising my dividend goal, will just mark it as 'achieved'. For 2016, I should have a clearer idea of where I want to go with my share portfolio, so the goal should be more challenging!

      Yes, I count my P2P as separate holdings, something else to monitor and keep track of!

    3. Sounds like a plan to me. The key thing is that it has been achieved!

      I know what you mean. Each year I have set a target I think is challenging and its turns out that I sail past it! Always nice to experience!

      I am looking forward to hearing more details on the Innovative Finance ISA so I can happily plump up my P2P exposure! I find them very attractive equity-alternative investments.

  2. An excellent update DD, I like your methodical, goal-oriented approach.

    As a bit of a diversification nerd myself, you might want to think about specific ongoing goals in addition to number of stocks covering:

    Maximum position size
    Sector allocation (number of stocks per sector, or % of portfolio)
    Minimum non-equity allocation (as a % of total portfolio)
    Minimum non-UK allocation (as a % of total portfolio)

    It's just a thought - trying to constructively criticise!


    1. Thanks, John! I am happy with my progress so far.

      Thanks for the thought-provoking pointers with regards to future goals.

      Yes, I have been thinking along those lines. In particular, the plan to limit dividend income weight to 5% in the future (a la Dividend Life). At the moment I use that as an unofficial rule but as a couple of my holdings are well above that at present it would be unattainable until some time has passed.

      My non-equity percentage has been something I have thought about. I'd like to develop a modestly-sized gilts portfolio sooner rather than later. However, I am willing to wait for yields to bob up a little first! I suspect I will include in this my P2P investments.

      Non-UK allocation much the same. Something I am going to work on in the future. As I suggested above, it may not be something I seriously build up until I work out the best method (at the moment the SIPP approach is my favoured one).

      Thanks again for the interesting comments.

  3. Hey DD, I may have missed it but where is your original article about "work freedom day" ? Trying to figure out what you mean exactly by the date since it's already passed.

    1. You're quite right, Rich.

      I included a link on my investing goals page but should have had one on here too. Now rectified!

  4. DD,

    Great first half of 2015, I think! Your progress has been tremendous so far, simply look at all those dividends that hit your account already.

    What I like most about this overview is, once again, the Work Freedom Day. Pretty crazy that yours is at the end of January already!

    Keep it up,

    1. Thanks, NMW.

      I am very happy so far. Considering the somewhat disjointed year I am having in general (set to continue sadly!) it is even more satisfying to watch the consistent goal outperformance of my investing.

      I know, to be so near to the end of January already with the WFD is truly excellent and very surprising. I find that goal really very inspiring indeed. I don't imagine I could have cut my expenses as effectively without it. Have to thank Dividend Life for thinking it up!

  5. Hi D²,

    Congrats on a great update - it's nice reaching the middle of the year and seeing what looks to be a largely downhill run now!

    I like the WPP and L&G purchases in particular.

    I was interested in reading about the total company limits including Weenie's comments - I was just asked about mine and I think Mike over at <a href=">thedividendguy</a> is researching an article about it.

    Anyway, mine's max of 60 companies spread among the 10 sectors since the research I've read suggested that's the upper limit for diversification; adding more stocks past that point fails to improve diversification significantly. Laws of diminishing returns and all that.

    Keep up the great progress!

    1. Thanks, DL. Yes, I am pretty happy with the H1 update. It certainly does feel like I have both momentum and gravity on my side for the second half of the year. Hence why I have been able to really ratchet up the goals for the rest of the year!

      WPP and L&G are good purchases I think. I am seriously thinking of bulking up my L&G holding. WPP is now my 6th largest holding so I may leave it at that size for now. Still very attractive though!

      As I understand it, after about 30 companies the law of diminishing returns really starts to shows its face with regards to the benefits of diversification. It still has an impact, but much much smaller. So I think your 60 point is very valid.

      Basically, I'd like to keep my portfolio between 30 and 70 holdings. However, the upper limit is not inflexible. I would consider going beyond. But very, very unlikely to go above 100. This I think would be my cut off point. After that I would start thinking about selling certain holdings and consolidating others.

      It is an interesting subject and one I would like to work out more fully in time! I will wait to see what Mike put together about that. Very interesting.

      Thanks a lot. Same to you. It is nice to see progress rollicking along!